Corporation X has one class of outstanding stock valued at $100 million.Six U.S.stockholders own equal portions of X stock and control 54 percent of the stock.How much additional stock would have to be acquired by any one of the U.S.stockholders in order for the corporation to qualify as a Controlled Foreign Corporation?

Question

Quizplus · Accepted Answer

For a corporation to qualify as a Controlled Foreign Corporation (CFC), more than 50% of the corporation must be owned by U.S. shareholders who each own at least 10% of the corporation's stock. Since six U.S. stockholders already control 54% of the stock equally, each owns 9% (54% divided by 6). To reach the 10% threshold necessary for CFC status, any one of the U.S. stockholders needs to acquire an additional 1% of the corporation's stock, which is $1 million worth of X stock (1% of $100 million).

Corporation X Has One Class of Outstanding Stock Valued at $100